Opening Interview

The first substantive interview in the sale process is usually the opening interview.  The principal function of the opening interview is to continue to develop the rapport created in the approach step.  The opening interview leads directly into the fact-finding interview.  The ethical principles governing full disclosure require that the prospective client be fully apprised of the practitioner's status as an advocate for a financial product or products.  What that means is simply that if the salesperson is a stock broker, a property and casualty or life insurance agent, that identifying information needs to be shared.  

If the practitioner represents a particular company, the status as a representative of that company needs to be disclosed; in addition, if the salesperson is a registered representative he or she should identify the company and broker/dealer and provide home office addresses and telephone numbers.  

Unless the practitioner is an RIA the practitioner should not represent him- or herself as a financial planner, investment planner, consultant or adviser.  It is ethically responsible to describe what you do and the results you seek as long as you also state that the results are accomplished through the purchase of stocks, bonds, mutual funds, life insurance, annuities, or whatever other product you sell to achieve the desired results.

Often the prospect needs to be disturbed about his or her present situation before taking any steps to improve it.  In order to disturb the prospective client, the opening interview will sometimes include graphics; typically, these graphics will depict marginal income tax brackets through the years or some other relevant statistics.  When using these graphics, it's important to make sure that they do not mislead the prospect when presented without accompanying descriptive text and that the material match the prospective client's level of understanding.  In addition to graphics, testimonial letters from satisfied clients are often employed.  If you choose to use testimonials or endorsements, they must be genuine and reflect the endorser's current opinion, and any financial interest held by the endorser -- for example, that it is a paid endorsement -- must be disclosed.  

 Although sometimes accomplished in a separate meeting, fact-finding often flows directly and easily from the opening interview and is an extension of it.  The object of the fact-finding interview is to gather sufficient information to support a recommendation that is suitable to the client's situation and consistent with his or her objectives and tolerance for risk.  That objective applies whether the interview is preliminary to an insurance product or an investment product recommendation.  

Usually, the fact-finding step of the sales process presents few specific ethical issues that have not already been considered. The practitioner has an ethical and legal duty to make a diligent effort to determine all of the client's circumstances that are relevant to his financial situation.  For the financial services practitioner seeking to make a suitable recommendation, these circumstances include the prospect's current finances as well as his or her hopes and dreams.  

Whenever interacting with the prospect, care must be taken to ensure that your questions don't inadvertently lead the prospect to believe that you are in the business of providing services not actually provided.  For example, a life insurance agent's questions regarding the prospect's investment portfolio could cause the prospect to conclude that the agent is in the business of providing investment advice apart from his business of selling financial products.  Unless the agent was an RIA, such a conclusion would be incorrect.  

Similarly, the tools that the practitioner uses could lead the prospect to erroneous conclusions.  For example, suppose the data-gathering form shown to the prospect is titled Financial Planning Form.  A similar conclusion -- that the practitioner is in the business of providing financial advice for a fee -- could be drawn by the prospect.  As a financial practitioner, you have the responsibility to avoid anything that could reasonably be expected to mislead the prospect.  Additionally, you have the ethical responsibility to correct any misperception of which you become aware.


Beginning in 2003, Federal law requires financial institutions, including insurance companies, banks, brokerage firms, etc., to safeguard the privacy of client financial information.  The Financial Modernization Act of 2002, also known as the Gramm-Leach-Blialy Act, limits the ability of financial institutions to share non-public financial information.  This federal law requires state regulatory authorities to enforce restrictions on the use of client information -- Florida's Department of Financial Services has implemented Rule 4-128 to comply with this federal mandate.  In general, this Rule requires insurers to notify policyholders and other customers of their privacy rights (what type of information is collected and disclosed, the types of affiliates and other third parties with who information might be shared, etc.) when the relationship is established, and an annual notification thereafter.  Customers must be given the opportunity to "opt-out" of information sharing for marketing and other purposes not related to the execution of the contract.  Non-public information may be disclosed to the extent it is necessary to implement the contract.  This rule also extends the policyholder's privacy rights to health information collected by the insurer.  Agents should be aware that information collected during the fact-finding interview is "privileged" and of the consequences of unauthorized disclosure of financial and medical information.